Today's Top Stories Also Noted: Spotlight On... Debit card interchange fees drop News From the Fierce Network:
Today's Top News1. Another layoff wave approaches
The hope not too long ago was that investment banking would rebound in 2012, an idea that perhaps moderated the layoff impulse at some banks. But it appears as if banks are resigned to doing more with fewer bankers (and traders), not to mention support staff. According to the Boston Consulting Group, banks just might eliminate 12 percent of their workforce in the "short-term." Fortune puts it starkly: "After adding thousands bankers in the past two years, financial firms again appear to be on the verge of cutting that many positions and then some. Consultants and Wall Street recruiters say banks could eliminate nearly 21,000 jobs from their securities divisions in New York alone. Worldwide cuts could be even larger. Recruiters say big banks are in the process of finalizing their downsizing plans, and that layoffs could start soon." It would appear that the layoff wave has already started. Bank of America, which has already wielded the axe on the consumer banking side, now has plans to get rid of 2,000 more positions in accord with Project New BAC, according to media reports. The layoffs will be felt acutely within Merrill Lynch, where 400 bankers are in line for pink slips. Similar action will be seen at other banks, such as Credit Suisse. The timing is interesting in that first-quarter earnings were generally stronger than expected at the top banks. Certainly, the collective increase in revenue was welcome. In some cases, the layoffs were previously planned. But the axe-wielding perhaps also reflects the view that a massive surge in investment banking business is not forthcoming. For more: Related articles: Read more about: Layoffs, jobs 2. A view from the recruiting trenches
A recent Duke graduate has penned a column that decries the "toxic culture" represented by Wall Street firms' recruiting efforts on college campuses. "I was quickly seduced by a Wall Street recruiting machine that is reshaping the culture of higher education and diverting the career paths of our best and brightest. I navigated a salacious recruiting process. I watched ruthless and cunning peers excel, and the more good-hearted crumble. I saw that being popular, good-looking and able to drink hard seemed to matter more than being smart…." She goes on to write "And as I began my internship search in the midst of the financial crisis, while the industry and our economy crumbled around us, not a single banker I met acknowledged blame on Wall Street's part. In the end, I landed a coveted offer, then turned it down because I had grown disillusioned…." This is a heartfelt, up-close, if not hugely original, take on the recruiting process. She is certainly entitled to her opinion. What you've got to like is that she's being entrepreneurial. She would very much like to write a book about all this and is apparently seeking representation from a literary agent. Her sample chapters might be worth a look. She does have a point of view. For more: Related articles:
Read more about: recruiting 3. Whose next to split chairman and CEO jobs?
When you get right down to it, shareholders tend to get much more worked up about executive compensation than they do about compensation of independent chairman. To be sure, adding an independent chairman to oversee the CEO strikes many as a good idea. Proxy advisory firms regularly support such initiatives, but it would be unwise to expect shareholders to muster the support needed to pass such a proposal anytime soon, though they might get a somewhat high percentage of votes. JPMorgan Chase offers a nice look at the issue. Jamie Dimon is indeed something of a celebrity CEO. But this week, ISS said that "total shareholder returns for J.P. Morgan have recently trailed peers significantly. Over the past three years, ISS says J.P. Morgan's shareholder returns have risen 3.3 percent, compared to a 13 percent gain for its peer group. Dimon has been chairman and CEO since 2006," notes Deal Journal. The ISS said in a release that, "JPM has a robust presiding director, independent board and key committees, and established governance guidelines. Given the company's lagging shareholder returns, however, shareholders could benefit from independent leadership on the board." With that said, ISS also supports the JPMorgan executive pay plan, and that's the issue that really galvanizes bank shareholders. Just look at the Citigroup results. So far, bank boards are getting by with moves to install new independent directors and "presiding directors." But you have to wonder how long they can hold if their shareholders continue to suffer. So which bank do you think will be next to split the job? Bank of America and Citigroup have separate chairman. Morgan Stanley had John Mack serve as chairman emeritus before handing the reins to CEO James Gorman. For more: Related articles:
Read more about: CEO, chairman 4. Occupy the SEC movement builds
On the surface, the Occupy Wall Street movement has fizzled. Many of the camps have been cleared out and the protestors are no longer front-page news. But the Washington Post takes note of an off-shoot movement that will hopefully last a bit longer. These former Wall Streeters--who worked as traders, quants, risk analysts, lawyers and compliance officers for top banks--want to effect change via the regulatory system. They have "waded deep into the weeds of the federal regulations, legal decisions and banking practices that make up the actual architecture of Wall Street. They're more likely to use a flowchart than protest signs to fight big banks. But they identify with the movement's animating belief that America's financial heavyweights wield too much power, and that its political leaders are too eager to do their bidding." They call themselves Occupy the SEC, and they have made their voices heard already. "Occupy the SEC had submitted its first official letter on Volcker to the SEC, holding marathon 12-hour meetings through the weekends to finish the response before the agency's Feb. 13 deadline for comment. Now they're trekking to Washington to present their 325-page treatise before federal regulators in official meetings with the FDIC, the Federal Reserve, the Office of the Comptroller of the Currency, and, yes, the SEC." They have also met with about 60 congressional staffers, including some Republicans, and they will sit down with Paul Volcker himself soon. You have to welcome the technical expertise this group brings, as a counterweight to the banks' views. For more: Related articles:
Read more about: Regulatory Activity, Occupy Wall Street
Few bank industry executives who didn't actually end up in prison have been as vilified as Ken Lewis, the former chief executive officer of Bank of America. His once-stellar career as a bank executive--he steadily built Bank of America into the largest consumer bank at one point--ran aground thanks to his disastrous decision to buy Countrywide in 2008, a decision for which the bank's shareholders and executives are still trying to make amends for. Some think Lewis's deal ranks among the worst deals, if not the worst, in U.S. corporate history. He's been out of the public light as of late, but he's resurfaced via an article by TheStreet.com, which notes that the disgraced Lewis "has slashed the asking price on his four-bedroom Charlotte, N.C. home by $200,000 to $3.65 million on April 25, according to the listing on Zillow. This is the third time the home's price has been dropped." The four bedroom, 1.27 acre estate "in a gated community on a 'very private lot,' has been on the market since at least Feb. 2010, when it was offered at $4.5 million." The property has been appraised at $2.68 million, which is up from a previous assessment of $1.87 million in 2006. My sense is that he's probably free and clear on the house and I don't expect a short sale. Poetic justice? For more:
Read more about: CEO, Bank of America Also NotedSPOTLIGHT ON... Debit card interchange fees drop This is hardly a surprise: The most recent Fed data confirms that debit card interchange fees have plummeted. Average interchange fees for banks fell to 24 cents last quarter from 43 cents two years earlier, according to the data released today. The Durbin Amendment has perhaps been the most profoundly felt aspect of Dodd-Frank. And the Reg E changes pale in terms of impact. No other plank crimped revenue like the amendment. That said, it could've been worse. Can you imagine if credit card interchange fees had been included? Article Company News: Industry News: Regulatory News: And Finally… How to get a raise. Article
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Wednesday, May 2, 2012
| 05.02.12 | Another layoff wave approaches
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